Chapter 5 - Health and Accident

Major Medical Expense Policy

A health insurance policy that provides broad coverage and high benefits for hospitalization, surgery, and physician services. Characterized by deductibles and coinsurance cost sharing.

Carryover Provision

Allows an insured to defer current health charges to the following year's deductible instead of the current year's deductible. The major medical deductible _____________ normally applies to expenses incurred during the last three months of the plan year.

Critical Illness Policies

Are an insurance product in which the insurer is contracted to typically make a lump sum cash payment if the policyholder is diagnosed with one of the specific illnesses on a predetermined list as part of an insurance policy.

Surgical Expense Policies

Are commonly written in conjunction with hospital expense policies. These policies pay for the costs of surgeons' services, whether the surgery is performed in or out of the hospital. Coverage includes surgeon's fees, anesthesiologist, and the operating room.

Health Reimbursement Arrangements (HRA)

Are employer-funded and employer-established, tax-advantaged health benefit plans that reimburse employees for out-of-pocket medical expenses and individual health insurance premiums. Unused amounts may be carried forward for reimbursement in future years. Reimbursements may be tax-free if the employee paid for qualified medical expenses or a qualified medical plan.

Hospital Indemnity Policies

Are forms of health insurance providing a stipulated daily, weekly, or monthly indemnity during hospital confinement; payable on an unallocated basis without regard to actual hospital expense.

Health Savings Accounts (HSA)

Are tax-advantaged medical savings accounts available to taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP). The funds contributed to an account are not subject to federal income tax at the time of deposit.

Hospital room and board benefits

Cover expenses for occupancy of the room and bed, general nursing care, food and beverages, and personal hygiene items. These limits may not provide for the full amount of hospital room and board charges incurred by the insured. For example, if the hospital expense benefit was $200 per day and the hospital actually charged $400 per day, the insured would be responsible for the additional $200 per day.

Hospital Expense Policies

Cover hospital room and board, miscellaneous hospital expenses (such as lab and x- ray charges), medicines, use of operating room, and supplies. These expenses are covered while the insured is confined in a hospital. There is no deductible and the limits on room and board are set at a specified dollar amount per day up to a maximum number of days.

Surgical Schedule Approach

Every surgical procedure is assigned a dollar amount by the insurer.

Basic Medical Expense Insurance

Insurance is a health insurance policy that provides "first dollar" benefits for specified (and limited) health care, such as hospitalization, surgery, or physician services. Characterized by limited benefit periods and relatively low coverage limits.

Preexisting conditions

Is an illness or medical condition that existed before a policy's effective date; usually excluded from coverage, through the policy's standard provisions or by waiver.

Stop-Loss

Is designed to stop the company's loss at a given point, as an aggregate payable under a policy, a maximum payable for any one disability, or the like; also applies to individuals, placing a limit on the maximum out-of- pocket expenses an insured must pay for health care, after which the health policy covers all expenses.

Relative Value Approach

Is similar to the surgical schedule method. The difference is that instead of a flat dollar amount being assigned to every surgical procedure, a specified set of units is assigned. The policy will carry a stated dollar-per-units amount (known as the conversion factor) to determine the benefit.

Coinsurance

Is the principle under which the company insures only part of the potential loss, the policyowners paying the other part. For instance, in a major medical policy, the company may agree to pay % of the insured expenses, with the insured to pay the other %.

Flat Deductible "initial deductible"

Is the stated dollar amount that applies to a covered loss (e.g. $500). It is per occurrence, per insured individual.

Integrated Deductible

Is used when a major medical plan is supplementing basic coverages.

Limited Risk (Dread Disease) Policies

Provide a variety of benefits for a specific disease such as cancer or heart disease. Benefits are usually paid as a scheduled, fixed-dollar amount for specified perils or medical procedures such as hospital confinement or chemotherapy

Limited Benefit Policies

Restrict benefits to specified accidents or diseases, such as travel policies, dread disease policies, ticket policies, and so forth.

Deductible

The amount of expense or loss to be paid by the insured before a health insurance policy starts paying benefits.

Per-Cause Deductible

The insured must satisfy a deductible for each accident or illness.

All-Cause Deductible

The insured only has to meet the deductible amount once during the benefit period.

Usual, Customary, and Reasonable Approach (UCR)

Under this, the surgical expense is compared to what is deemed reasonable and customary for the geographical part of the country where the surgery was performed. The _________________ is the maximum amount an insurer will consider eligible for reimbursement under a health insurance plan.

Medical Savings Accounts (MSA's)

Were created to help employees of small employers, as well as self- employed individuals, pay for their medical care expenses. ______'s are tax-free accounts set up with financial institution such as banks and insurance companies. Qualified medical savings accounts are available for employers with no more than 50 employees.

Flexible Savings Accounts or Flexible Spending Accounts

are tax-advantaged accounts that can be set up through a cafeteria plan of an employer. An _____ allows an employee to set aside a portion of earnings to pay for qualified medical expenses (such as prescription medication) as established in the cafeteria plan.

Comprehensive Major Medical

combines the features of basic expense coverage and major medical coverage, sold as one policy. Cover practically all medical expenses, hospital, physicians, surgical, nursing, drugs, laboratory tests, etc.

Corridor Deductible

comes in to play when a major medical policy is supplementing basic coverage that contains no deductible, the _______ deductible is not applied until the basic coverage has been exhausted.